Oil struggles as GDP falls in Germany, eurozone

The price of oil hovered around $97 a barrel on Thursday after fresh data showed that the economies of the 17 countries sharing the euro currency shrank more than expected at the end of last year.

By early afternoon in Europe, benchmark oil for March delivery was up 3 cents to $97.04 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the Nymex contract dropped 50 cents to finish at $97.01 a barrel.

The eurozone economy shrank by 0.6 percent in the final quarter of 2012 from the previous three-month period, more than the 0.4 percent drop expected by markets, said Eurostat, the EU's statistics office. Growth figures for Germany, Europe's largest economy, also showed a 0.6 percent contraction for that period.

The eurozone has been in a recession for the past three quarters.

The negative growth data pushed the euro lower against the dollar and weighed on prices by making crude priced in dollars more expensive and a less attractive investment for traders using currencies other than the greenback. On Thursday the euro was down to $1.3340 from $1.3438 late Wednesday in New York.

"It seems that the strengthening U.S. dollar against the euro has set the bearish tone for today's trading activity," said a report from Sucden Financial Research in London.

Gains were also limited by conflicting estimates for crude demand in 2013.

On Wednesday, the Paris-based International Energy Agency lowered its consumption forecast by 85,000 barrels a day compared with data from a month ago. The IEA expects the world to use 90.7 million barrels of crude oil a day this year. That is 1 million barrels a day more than OPEC's estimate, released Tuesday, of 89.7 million barrels a day. OPEC raised its 2013 forecast for global demand, citing signs of recovery in the global economy.

Analysts said oil prices have avoided dramatic fluctuations because of the difficulty in pinpointing what energy demand will be this year.

"OPEC revised its demand outlook higher for 2013, while the IEA revised its demand outlook lower for the same period," said Michael Hewson of CMC Markets, adding that oil prices have been "hemmed in by divergent views on the demand outlook for 2013."

The April contract for Brent crude, used to price international varieties of oil, was down 45 cents at $117.43 a barrel on the ICE Futures exchange in London.